just being dumb now

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Primble
Primble Registered Posts: 734 Epic contributor 🐘
i want to say 1000 adverse but its not an option

A product standard material use is 2kg per unit. The standard price is £2.50 per kg.

In January 53000 kg were used at a cost of £136,000. 27,000 units were produced.

What is the materials usage variance


2,500 Favourable
2,500 Adverse
4,000 Favourable
4,000 Adverse

i done (2x27000)-53000

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  • aimeexox
    aimeexox Registered Posts: 38 Regular contributor ⭐
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    I got 2,500 FAV.

    Actual quantity x standard price
    53,000 x £2.50 = 132,500

    Standard quantity (of actual output) x standard price
    54,000 x £2.50 = 135,000

    = 2,500 :/ i think...
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    Primble wrote: »

    A product standard material use is 2kg per unit. The standard price is £2.50 per kg.

    In January 53000 kg were used at a cost of £136,000. 27,000 units were produced.

    What is the materials usage variance


    aimeexox is correct

    Try and work out the answers that will help you understand the varience process.

    Understand EXPECTED usage and; ACTUAL usage

    Expected materaial usage for 27000 units is (27000 x 2kg) = 54,000 Kg
    Actual material usage to produce 27,000 units is..............= 53,000 Kg

    Reading the above figure is the Usage FAVOURABLE or ADVERSE?

    Because we used less material then expected; the varience = FAVOURABLE. (This automatically eliminates 2 adverse answers)
    Primble wrote: »

    2,500 Favourable
    2,500 Adverse
    4,000 Favourable
    4,000 Adverse

    the calculation is (54,000 -53,000) x £2.50 = £2,500 FAVOURABLE

    Answer A is correct
  • stuartander
    stuartander Registered Posts: 82 Regular contributor ⭐
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    Keep these questions coming, lol. They good Practice!!!! Im dreading my MAC exam next month
  • mini_schnauzer
    mini_schnauzer Registered Posts: 347 Dedicated contributor 🦉
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    HI

    I agree with you Stuartander. I am finding MAC horrible. DFS was a breeze compaired to MAC - it just doesnt click with me for some reason.
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    ME THREE but we keep practising, MAC has to be the most difficult as yet (which you would expect) and cant even remember anything we did in ecr
  • Primble
    Primble Registered Posts: 734 Epic contributor 🐘
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    Oh i got confused because it didn't say anything about price variance so ignored the price
  • anniem
    anniem Registered Posts: 1,326 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    ME THREE but we keep practising, MAC has to be the most difficult as yet (which you would expect) and cant even remember anything we did in ecr

    I'm exactly the same - can't remember a thing about ECR as I did it sooooo long ago.

    My worry about that is when I took ECR I remember reading posts from peeps who took PEV/PCR saying that they had thrown elements of ECR into the PEV/PCR exams. I also remember Steve or Sandy posted that it was reasonable to assume that students should still have this knowledge!!! HA - I WISH!
    FMAAT - AAT Licensed Member in Practice - Pewsey, Wiltshire
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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    Primble wrote: »
    i want to say 1000 adverse but its not an option

    A product standard material use is 2kg per unit. The standard price is £2.50 per kg.

    In January 53000 kg were used at a cost of £136,000. 27,000 units were produced.

    What is the materials usage variance


    2,500 Favourable
    2,500 Adverse
    4,000 Favourable
    4,000 Adverse

    i done (2x27000)-53000


    I didn't read the question properly, as usual.....

    Total price & usage variance is -1000

    but material variance alone is 2500 fav. Always stick to the std cost when working that out.
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    PGM wrote: »

    Total price & usage variance is -1000

    but material variance alone is 2500 fav.

    Therefore the price varience must be 3500 ADVERSE

    Calaulations to prove that


    £136000 divideby 53000kg = £2.56604 per kg

    Autual price paid ....= £2.56604
    Expected price to pay £2.50

    Actual price is greater then expected pricetherefore varience has to be ADVERSE

    (2.56604 - 2.50) x 53000 = 3500 ADVERSE
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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    no I got it to about -1000 in total

    The price is advert but material usage is favourable.
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    PGM wrote: »
    no I got it to about -1000 in total

    Can you please explain /show your calculations on how you got -1000?
  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    Hello,,

    Material Usage:

    Std 27,000 X 2 = 54,000Kgs x £ 2.50 = 135,000
    Act ...................53,000Kgs x £ 2.50 = 132,500
    Variance = 2,500 (F)

    Material Price:

    Std 53,000Kgs X £ 2.50 = 132,500
    Act........................... = 136,000
    Variance = 3,500 (A)

    Total Material Vairance = £ 1,000 (A)

    Hope this helps.
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